ETIHAD ETISALAT COMPANY (A Saudi Joint Stock Company

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ETIHAD ETISALAT COMPANY (A Saudi Joint Stock Company) CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) For the three-month period ended 31 March 2021 Together with Independent Auditor’s Review Report

Contents

Independent Auditor’s Review Report ...... 2 Condensed consolidated interim statement of financial position ...... 4 Condensed consolidated interim statement of profit or loss ...... 5 Condensed consolidated interim statement of comprehensive income ...... 6 Condensed consolidated interim statement of changes in shareholders’ equity ...... 7 Condensed consolidated interim statement of cash flows ...... 8 Notes to the condensed consolidated interim financial statements ...... 9-18

Etihad Etisalat Company (A Saudi Joint Stock Company) Notes to the condensed consolidated interim financial statements For the three-month period ended 31 March 2021 (All amounts in Saudi Riyals thousands unless otherwise stated)

1 CORPORATE INFORMATION

1.1 Etihad Etisalat Company

Etihad Etisalat Company (“Mobily” or the “Company”), a Saudi Joint Stock Company, is registered in the Kingdom of Saudi Arabia under commercial registration number 1010203896 issued in Riyadh on 14 December 2004 (corresponding to Dhul Qa’adah 2, 1425H). The main address for the Company is P.O. Box 23088, Riyadh 11321, Kingdom of Saudi Arabia.

The Company was incorporated pursuant to the Royal decree number M/40 dated 18 August 2004 (corresponding to Rajab 2, 1425H) approving the Council of Ministers resolution number 189 dated 10 August 2004 (corresponding to Jumada II 23, 1425H) to approve the award of the license to incorporate a Saudi Joint Stock Company under the name of “Etihad Etisalat Company”.

Pursuant to the Council of Ministers resolution number 190 dated 10 August 2004 (corresponding to Jumada II 23, 1425H), the Company obtained the licenses to install and operate 2G and 3G mobile telephone network including all related elements and the provision of all related services locally and internationally through its own network.

Pursuant to the Communication and Information Technology Commission (CITC) resolution number 5125 dated 21 February 2017 (corresponding to Jumada I 24, 1438H), the Company obtained a Unified License to provide all licensed telecommunication services including fixed line voice services and fixed internet.

The Company’s main activity is to establish and operate mobile wireless telecommunications network, fiber optics networks and any extension thereof, manage, install and operate telephone networks, terminals and communication unit systems, in addition to sell and maintain mobile phones and communication unit systems in the Kingdom of Saudi Arabia. The Group commenced its commercial operations on 25 May 2005 (corresponding to Rabi Al-Thani 17, 1426H).

The authorized, issued and paid up share capital of the Company is SR 7,700 million divided into 770 million shares of SR 10 each.

1.2 Subsidiary Companies

Below is the summary of Company’s subsidiaries and ownership percentage as at 31 March 2021: Ownership percentage Country of Initial Name incorporation Direct Indirect investment Mobily Infotech India Private Limited India 99.99% 0.01% 1,836 Zajil International Network for Telecommunication Saudi Arabia 96.00% 4.00% 80,000 Company* National Company for Business Solutions Saudi Arabia 95.00% 5.00% 9,500 National Company for Business Solutions FZE United Arab - 100.00% 184 Emirates Mobily Ventures Holding W.L.L Bahrain 100.00% - 2,510 Etihad Fintech Company (Single Person Company) Saudi Arabia 100.00% - 50

* On 15 March 2021, the Board of Directors of Etihad Etisalat Company approved to liquidate Zajil International Network for Telecommunication Company.

On 17 February 2021, the commercial registration of Bayanat Al-Oula for Network Services Company has been cancelled and accordingly the assets and liabilities have been transferred to Etihad Etisalat Company at book value.

2 BASIS OF ACCOUNTING

2.1 Statement of Compliance

These condensed consolidated interim financial statements comprise the financial information of the Company and its subsidiaries (together referred to as the ‘Group’).

These condensed consolidated interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ that is endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by Saudi Organization for Certified Public Accountants (SOCPA).

The condensed consolidated interim financial statements do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2020.

The condensed consolidated interim financial statements have been approved for issuance on 18 April 2021 (corresponding to 6 Ramadan 1442H).

2.2 Basis of measurement

These condensed consolidated interim financial statements have been prepared on historical cost basis unless stated otherwise using the going concern basis of assumption.

2.3 Functional and presentation currency

These condensed consolidated interim financial statements are presented in Saudi Riyal (“SR”) which is the functional currency of the Company. All amounts have been rounded off to the nearest thousands unless otherwise stated.

3 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied in these condensed consolidated interim financial statements are in accordance with International Financial Reporting Standards “IFRS” that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by SOCPA which are consistent with those that were applied in the Group’s annual consolidated financial statements for the year ended 31 December 2020.

The principal accounting policies applied in the preparation of these condensed consolidated interim financial statements have been consistently applied to all periods presented.

4 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of the Group’s condensed consolidated interim financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability affected in future periods. The significant judgments made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the Group’s annual consolidated financial statements in accordance with IFRS that are endorsed in the Kingdom of Saudi Arabia and other standards and pronouncements issued by SOCPA for the year ended 31 December 2020.

4 SIGNIFICANT ACCOUNTING ESTIMATES AND ASSUMPTIONS (CONITINUED)

4.1 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either: • In the principal market for the asset or liability; or • In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits from the asset’s highest and best use or by selling it to another market participant that would utilize the asset in its highest and best use.

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the condensed consolidated interim financial statements are categorized within the fair value hierarchy. This is described as follows based on the lowest level input that is significant to the fair value measurement as a whole: • Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities; • Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable; and • Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the condensed consolidated interim financial statements at fair value on a recurring basis, the Group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The Group determines the policies and procedures for both recurring fair value measurement, and for non-recurring measurement.

At each reporting date, the Group analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, the Group verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents. The Group also compares the change in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy, as explained above.

4.2 IMPACT OF COVID-19 PANDEMIC The Group’s operations may be affected by the ongoing outbreak of the coronavirus disease 2019 (COVID-19) which was declared a pandemic by the World Health Organization in March 2020. The ultimate disruption which may be caused by the outbreak is uncertain. The telecommunications industry has been designated as an essential service by the Government of the Kingdom of Saudi Arabia and as such the Group continues to operate while taking into account the health and safety of the workforce. Possible effects of the outbreak may include, but are not limited to; disruption to the Group’s customers and revenue, unavailability of products and supplies used in operations and delayed payments by customers. As the Covid-19 outbreak continues to evolve, it is difficult to forecast its full extent and duration of the economic impact as of now. The management of the Group is currently monitoring the situation and its impact on the Group’s operation, cash flows and financial position. Management believes, based on their assessment, that the Group has sufficient liquidity available to continue to meet its financial commitments for the foreseeable future as and when they become due.

5 PROPERTY AND EQUIPMENT Leasehold Telecommunicati Computer Office Capital Land Buildings on network equipment equipment Vehicles work in Total improvements equipment and software and furniture progress Cost: At 1 January 2021 267,423 1,207,380 889,844 44,850,521 5,856,781 418,064 2,774 638 53,493,425 Additions - - 7,766 126,131 20,740 3 - 19 154,659 Disposals - - (1,724) (64,422) (15,456) (369) - - (81,971) At 31 March 2021 267,423 1,207,380 895,886 44,912,230 5,862,065 417,698 2,774 657 53,566,113

Depreciation: At 1 January 2021 - 416,151 727,139 25,910,981 4,716,933 399,085 2,500 - 32,172,789 Charge for the period - 14,749 9,209 635,457 96,498 858 - - 756,771 Disposals - - (1,695) (62,590) (15,060) (369) - - (79,714) At 31 March 2021 - 430,900 734,653 26,483,848 4,798,371 399,574 2,500 - 32,849,846

Net book value: At 31 March 2021 267,423 776,480 161,233 18,428,382 1,063,694 18,124 274 657 20,716,267 At 31 December 2020 267,423 791,229 162,705 18,939,540 1,139,848 18,979 274 638 21,320,636

During the three-month period ended 31 March 2021, the Group has capitalized internal technical salaries amounting to SR 40 million (31 December 2020: SR 181 million) .

6 RIGHT OF USE ASSETS

Telecommunic ation network Buildings Land Total equipment Cost: At 1 January 2021 4,143,268 789,980 52,195 4,985,443 Additions 148,166 83,610 - 231,776 Lease cancelation (1,618) - - (1,618) At 31 March 2021 4,289,816 873,590 52,195 5,215,601

Depreciation: At 1 January 2021 2,219,706 429,005 15,706 2,664,417 Charge for the period 118,087 29,360 534 147,981 Lease cancelation (434) - - (434) At 31 March 2021 2,337,359 458,365 16,240 2,811,964

Net book value: At 31 March 2021 1,952,457 415,225 35,955 2,403,637 At 31 December 2020 1,923,562 360,975 36,489 2,321,026

7 INTANGIBLE ASSETS

Telecommunic Indefeasible ation services Goodwill Right of Use Others Total licenses (IRU) Cost: At 1 January 2021 13,586,350 1,466,865 1,245,954 97,689 16,396,858 Additions - - 44 - 44 At 31 March 2021 13,586,350 1,466,865 1,245,998 97,689 16,396,902

Amortization: At 1 January 2021 7,365,947 - 693,452 97,689 8,157,088 Charge for the period 69,214 - 21,586 - 90,800 At 31 March 2021 7,435,161 - 715,038 97,689 8,247,888

Net book value: At 31 March 2021 6,151,189 1,466,865 530,960 - 8,149,014 At 31 December 2020 6,220,403 1,466,865 552,502 - 8,239,770

8 ACCOUNTS RECEIVABLE

31 March 31 December 2021 2020

Accounts receivable 5,868,772 5,475,764 Less: allowance for impairment loss on accounts receivable (1,639,273) (1,580,458) 4,229,499 3,895,306

The movement of the allowance for impairment loss on accounts receivable is as follows:

31 March 31 December 2021 2020

Opening balance (1,580,458) (1,628,189)

(Charge) / Reversal for the period / year 5,158 (58,815) Written off during the period / year - 42,573 Closing balance (1,639,273) (1,580,458)

9 RELATED PARTIES TRANSACTIONS AND BALANCES

9.1 Related party transactions

The Group has the following related parties:

Party Relationship Emirates Telecommunication Group Company PJSC Founding shareholder Emirates Data Clearing House Associate to Founding shareholder Etisalat Misr S.A.E. Associate - Subsidiary to Founding shareholder Etisalat Afghanistan Associate - Subsidiary to Founding shareholder Etisalat Al Maghrib S.A (Maroc Telecom) Associate - Subsidiary to Founding shareholder Pakistan Telecommunication Company Limited Associate - Subsidiary to Founding shareholder Emirates Cable TV and Multimedia LLC Associate - Subsidiary to Founding shareholder Sehati for Information Service Company Joint venture

The Group transacted with related parties in ordinary course of business. Following are the details of major transactions with related parties: 31 March 31 March 2021 2020 Interconnection services and roaming services rendered Founding shareholder 9,820 14,997 Associates 559 2,351 Interconnection services and roaming services received Founding shareholder 53,917 62,987 Associates 26,825 30,292 Management fees Founding shareholder 29,514 24,617 Other management expenses Founding shareholder 1,623 1,515 Other telecommunication services Associates 944 2,317

Compensation and benefits to key management personnel 31 March 31 March 2021 2020

Short term employee benefits 44,193 25,155 Post-employment benefits 889 768 Total compensation and benefits to key management personnel 45,082 25,923

Services rendered to related parties comprise of the provision of telecommunication service, interconnection services and roaming services by the Group based on normal commercial terms. Services received from related parties comprise of telecommunication service, interconnection services and roaming services to the Group based on normal commercial terms. Management fees and other management expenses are calculated based on the relevant agreements with Emirates Telecommunication Group Company PJSC. The balances due to and from related parties are unsecured and will be settled in cash.

Transactions with key management personnel comprise of remunerations to Board of Directors and other senior management members who are key management personnel of the Group.

9 RELATED PARTIES TRANSACTIONS AND BALANCES (CONTINUED)

9.2 Related party balances

31 March 31 December 2021 2020 Due from related parties Founding shareholder 88,985 85,464 Associates 3,695 3,569 Joint venture 23,166 23,166 115,846 112,199 Due to related parties Founding shareholder 241,270 129,016 Associates 23,386 23,820 264,656 152,836

10 LOANS AND NOTES PAYABLE

31 March 31 December 2021 2020

Long-term loans 11,338,586 11,483,815 Less: current portion (1,350,421) (1,349,457) Non-current 9,988,165 10,134,358 a) Maturity profile of loans and notes payable:

31 March 31 December 2021 2020

Less than one year 1,350,421 1,349,457 Between one to five years 6,312,865 5,894,525 Over five years 3,675,300 4,239,833

11 FINANCIAL ASSETS AND LIABILITIES

11.1 Financial assets

31 March 31 December 2021 2020 Financial assets at fair value: Financial assets - fair value through other comprehensive income * 7,097 7,097 Derivatives financial instruments** 11,378 12,979 Total financial assets at fair value 18,475 20,076

Financial assets at amortized cost: Accounts receivable 4,229,499 3,895,306 Due from related parties 115,846 112,199 Other financial assets 500,000 300,000 Cash and cash equivalents 1,286,662 929,498 Total financial assets at amortized cost 6,132,007 5,237,003 Total financial assets 6,150,482 5,257,079

Current financial assets 6,143,385 5,249,982 Non-current financial assets 7,097 7,097 Total financial assets 6,150,482 5,257,079

11 FINANCIAL ASSETS AND LIABILITIES (CONTINUED)

11.2 Financial liabilities

31 March 31 December 2021 2020 Financial liabilities at fair value: Derivatives financial instruments** 72,983 79,473 Total financial liabilities at fair value 72,983 79,473

Financial liabilities at amortized cost: Loans and notes payable 11,338,586 11,483,815 Lease liabilities 2,734,137 2,604,766 Accounts payable 4,683,141 4,668,596 Due to related parties 264,656 152,836 Other financial liabilities 223,653 250,227 Total financial liabilities at amortized cost 19,244,173 19,160,240 Total financial liabilities 19,317,156 19,239,713

Current financial liabilities 7,217,783 7,019,463 Non-current financial liabilities 12,099,373 12,220,250 Total financial liabilities 19,317,156 19,239,713

* The fair value of these unquoted equity shares was categorized as level 3. ** The fair value of these derivatives financial instruments was categorized as level 2. Fair values of financial assets and financial liabilities measured at amortized cost are not significantly different from their carrying amounts.

12 REVENUE

Consumer Business Wholesale Outsourcing Total 31 March 2021 Usage 1,936,318 251,903 237,208 - 2,425,429 Activation and subscription fees 529,320 141,696 - - 671,016 Others 229,162 183,864 39,348 53,862 506,236 2,694,800 577,463 276,556 53,862 3,602,681

31 March 2020 Usage 2,107,255 165,446 283,882 - 2,556,583 Activation and subscription fees 475,461 115,269 - - 590,730 Others 173,969 192,238 34,469 51,634 452,310 2,756,685 472,953 318,351 51,634 3,599,623

13 BASIC AND DILUTED EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary equity holders of the Group by the weighted average number of ordinary shares outstanding during the period.

The diluted earnings per share is same as the basic earnings per share as the Group does not have any dilutive instruments in issue. 31 March 31 March 2021 2020

Profit for the period 225,869 130,279 Weighted average number of shares 770,000 770,000 Basic and diluted earnings per share (in SR) 0.29 0.17

14 COMMITMENTS AND CONTINGENCIES

14.1 Capital commitments

The Group has capital commitments resulting from contracts for supply of property and equipment, which were entered into and not yet executed at the condensed consolidated interim statement of financial position date in the amount of SR 1.15 billion as at 31 March 2021 (31 December 2020: SR 0.97 billion).

14.2 Contingent liabilities

The Group had contingent liabilities in the form of letters of guarantee and letters of credit amounting to SR 915 million as at 31 March 2021 (31 December 2020: SR 988 million).

The CITC violation committee has issued several penalty resolutions against the Group which the Group has opposed in accordance with the Telecom Status and its regulations. The reasons of issuing these resolutions vary between the manner followed in issuing prepaid SIM Cards and providing promotions that have not been approved by CITC and/or other reasons.

Multiple lawsuits were filed by the Group against CITC at the Board of Grievances in order to oppose to such resolutions of the CITC violation committee in accordance with the Telecom Status and its regulations, as follows:

• There are (524) lawsuits filed by the Group against CITC amounting to SR 543 million as of 31 March 2021. • The Board of Grievance has issued (157) verdicts in favor of the Group voiding (157) resolutions of CITC violation committee with a total penalties amounting to SR 376 million as of 31 March 2021. • Some of these verdicts have become conclusive (after they were affirmed by the appeal court) cancelling penalties with a total amounting to SR 376 million as of 31 March 2021.

Management and the Board of Directors believe that, based on the status of these lawsuits as of 31 March 2021, adequate and sufficient provisions have been recorded.

There are 189 lawsuits filed by some of the shareholders against the Group before the Committee for the Resolutions of Security Disputes and still being adjudicated by the said committee. As of 31 March 2021, the Company has received (176) final favorable verdicts. Whereas, (13) cases remain ongoing.

The Group is subject to zakat according to the regulations of the General Authority of Zakat and Tax (GAZT) in the Kingdom of Saudi Arabia. The Group files its zakat returns on a consolidated basis, starting from the financial year ended 31 December 2009 and thereafter, where it includes the Company and its subsidiaries due to the fact that the Group is one economic entity wholly owned and managed by the Company.

The Group has filed its zakat returns with GAZT for the years through 2019 and settled its zakat thereon. During the year ended 31 December 2016, the Group submitted adjusted zakat returns for the years 2013 and 2014, as a result of restatement of the consolidated financial statements for the said years.

The Group has finalized its zakat status for the years up to 2009. The Group has received zakat and withholding tax assessments for the years 2010, 2011 and 2014 to 2018 that showed additional zakat and withholding tax liabilities of SR 157 million and SR 154 million respectively, which have been appealed against by the Group at the Preliminary and Higher Appeal Committees. Recently, the Higher Appeal Committee has issued certain rulings in favor of the company related to zakat and withholding tax disputes. Management believes that it has sufficient grounds to contest the matters included in the assessments and the eventual outcome of the appeal process will not result in any significant liability.

15 SEGMENT INFORMATION

Information regarding the Group’s operating segments is set out below in accordance with IFRS 8 Operating Segments. IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reviewed by the Group’s Chief Operating Decision Maker (“CODM”) and used to allocate resources to the segments and to assess their performance.

The Group is engaged in a single line of business, being the supply of telecommunications services and related products. The majority of the Group’s revenues, profits and assets relate to its operations in the Saudi Arabia. The operating segments that are regularly reported to the CODM are Consumer, Business, Wholesale and Outsourcing.

The CODM used to receive other operational financial aggregates on a group consolidated level. This is the measure reported to the Group’s Board of Directors for the purpose of resource allocation and assessment of segment performance.

31 March 31 March 2021 2020 Consumer revenue 2,694,800 2,756,685 Business revenue 577,463 472,953 Wholesale revenue 276,556 318,351 Outsourcing revenue 53,862 51,634 Total revenue 3,602,681 3,599,623 Total cost of revenue (1,531,125) (1,534,223) Total operating expense (706,969) (780,216) Depreciation and amortization (995,552) (988,914) Total non-operating expense (124,871) (151,812) Capital expenditures 154,703 441,561

16 SUBSEQUENT EVENTS No material events occurred subsequent to the reporting date, which could materially affect the condensed consolidated interim financial statements, and the related disclosures for the three-month period ended 31 March 2021.

17 COMPARATIVE FIGURES Certain comparative figures have been reclassified to conform to the current period’s presentation.